(a) Unless the context otherwise requires, words or phrases defined in this section, or in the additional definitions contained in other articles of the Uniform Commercial Code that apply to particular articles or parts thereof, have the meanings stated.

(b) Subject to definitions contained in other articles of the Uniform Commercial Code that apply to particular articles or parts thereof:

(1) "action", in the sense of a judicial proceeding, includes recoupment, counterclaim, set-off, suit in equity and any other proceeding in which rights are determined;

(2) "aggrieved party" means a party entitled to pursue a remedy;

(3) "agreement", as distinguished from "contract", means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing or usage of trade as provided in Section 55-1-303 NMSA 1978;

(4) "bank" means a person engaged in the business of banking and includes a savings bank, savings and loan association, credit union and trust company;

(5) "bearer" means a person in control of a negotiable electronic document of title or a person in possession of a negotiable instrument, negotiable tangible document of title or certificated security that is payable to bearer or indorsed in blank;

(6) "bill of lading" means a document of title evidencing the receipt of goods for shipment issued by a person engaged in the business of directly or indirectly transporting or forwarding goods. The term does not include a warehouse receipt;

(7) "branch" includes a separately incorporated foreign branch of a bank;

(8) "burden of establishing" a fact means the burden of persuading the trier of fact that the existence of the fact is more probable than its nonexistence;

(9) "buyer in ordinary course of business" means a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods, and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. A person that sells oil, gas or other minerals at the wellhead or minehead is a person in the business of selling goods of that kind. A buyer in ordinary course of business may buy for cash, by exchange of other property or on secured or unsecured credit and may acquire goods or documents of title under a preexisting contract for sale. Only a buyer that takes possession of the goods or has a right to recover the goods from the seller under Chapter 55, Article 2 NMSA 1978 may be a buyer in ordinary course of business. "Buyer in ordinary course of business" does not include a person that acquires goods in a transfer in bulk or as security for or in total or partial satisfaction of a money debt;

(10) "conspicuous", with reference to a term, means so written, displayed or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court. Conspicuous terms include the following:

(A) a heading in capitals equal to or greater in size than the surrounding text or in contrasting type, font or color to the surrounding text of the same or lesser size; and

(B) language in the body of a record or display in larger type than the surrounding text or in contrasting type, font or color to the surrounding text of the same size or set off from surrounding text of the same size by symbols or other marks that call attention to the language;

(11) "consumer" means an individual who enters into a transaction primarily for personal, family or household purposes;

(12) "contract", as distinguished from "agreement", means the total legal obligation that results from the parties' agreement as determined by the Uniform Commercial Code as supplemented by any other applicable laws;

(13) "creditor" includes a general creditor, a secured creditor, a lien creditor and any representative of creditors, including an assignee for the benefit of creditors, a trustee in bankruptcy, a receiver in equity and an executor or administrator of an insolvent debtor's or assignor's estate;

(14) "defendant" includes a person in the position of defendant in a counterclaim, cross-claim or third-party claim;

(15) "delivery", with respect to an electronic document of title, means voluntary transfer of control, and with respect to an instrument, a tangible document of title or chattel paper, means voluntary transfer of possession;

(16) "document of title" means a record: (i) that in the regular course of business or financing is treated as adequately evidencing that the person in possession or control of the record is entitled to receive, control, hold and dispose of the record and the goods the record covers; and (ii) that purports to be issued by or addressed to a bailee and to cover goods in the bailee's possession that are either identified or are fungible portions of an identified mass. The term includes a bill of lading, transport document, dock warrant, dock receipt, warehouse receipt and order for delivery of goods. An electronic document of title means a document of title evidenced by a record consisting of information stored in an electronic medium. A tangible document of title means a document of title evidenced by a record consisting of information that is inscribed on a tangible medium;

(17) "fault" means a default, breach or wrongful act or omission;

(18) "fungible goods" means:

(A) goods of which any unit, by nature or usage of trade, is the equivalent of any other like unit; or

(B) goods that by agreement are treated as equivalent;

(19) "genuine" means free of forgery or counterfeiting;

(20) "good faith", except as otherwise provided in Chapter 55, Article 5 NMSA 1978, means honesty in fact and the observance of reasonable commercial standards of fair dealing;

(21) "holder" means:

(A) the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession;

(B) the person in possession of a negotiable tangible document of title if the goods are deliverable either to bearer or to the order of the person in possession; or

(C) the person in control of a negotiable electronic document of title;

(22) "insolvency proceeding" includes an assignment for the benefit of creditors or other proceeding intended to liquidate or rehabilitate the estate of the person involved;

(23) "insolvent" means:

(A) having generally ceased to pay debts in the ordinary course of business other than as a result of bona fide dispute;

(B) being unable to pay debts as they become due; or

(C) being insolvent within the meaning of federal bankruptcy law;

(24) "money" means a medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries;

(25) "organization" means a person other than an individual;

(26) "party", as distinguished from "third party", means a person that has engaged in a transaction or made an agreement subject to the Uniform Commercial Code;

(27) "person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency or instrumentality; public corporation; or any other legal or commercial entity;

(28) "present value" means the amount as of a date certain of one or more sums payable in the future, discounted to the date certain by use of either an interest rate specified by the parties if that rate is not manifestly unreasonable at the time the transaction is entered into or, if an interest rate is not so specified, a commercially reasonable rate that takes into account the facts and circumstances at the time the transaction is entered into;

(29) "purchase" means taking by sale, lease, discount, negotiation, mortgage, pledge, lien, security interest, issue or reissue, gift or any other voluntary transaction creating an interest in property;

(30) "purchaser" means a person that takes by purchase;

(31) "record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form;

(32) "remedy" means any remedial right to which an aggrieved party is entitled with or without resort to a tribunal;

(33) "representative" means a person empowered to act for another, including an agent, an officer of a corporation or association and a trustee, executor or administrator of an estate;

(34) "right" includes remedy;

(35) "security interest" means an interest in personal property or fixtures that secures payment or performance of an obligation. "Security interest" includes any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible or a promissory note in a transaction that is subject to Chapter 55, Article 9 NMSA 1978. "Security interest" does not include the special property interest of a buyer of goods on identification of those goods to a contract for sale under Section 55-2-401 NMSA 1978, but a buyer may also acquire a "security interest" by complying with Chapter 55, Article 9 NMSA 1978. Except as otherwise provided in Section 55-2-505 NMSA 1978, the right of a seller or lessor of goods under Chapter 55, Article 2 or 2A NMSA 1978 to retain or acquire possession of the goods is not a "security interest", but a seller or lessor may also acquire a "security interest" by complying with Chapter 55, Article 9 NMSA 1978. The retention or reservation of title by a seller of goods notwithstanding shipment or delivery to the buyer under Section 55-2-401 NMSA 1978 is limited in effect to a reservation of a "security interest". Whether a transaction in the form of a lease creates a "security interest" is determined pursuant to Section 55-1-203 NMSA 1978;

(36) "send" in connection with a writing, record or notice means:

(A) to deposit in the mail or deliver for transmission by any other usual means of communication with postage or cost of transmission provided for and properly addressed and, in the case of an instrument, to an address specified thereon or otherwise agreed, or if there be none to any address reasonable under the circumstances; or

(B) in any other way to cause to be received any record or notice within the time it would have arrived if properly sent;

(37) "signed" includes using any symbol executed or adopted with present intention to adopt or accept a writing;

(38) "state" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands or any territory or insular possession subject to the jurisdiction of the United States;

(39) "surety" includes a guarantor or other secondary obligor;

(40) "term" means a portion of an agreement that relates to a particular matter;

(41) "unauthorized signature" means a signature made without actual, implied or apparent authority. The term includes a forgery;

(42) "warehouse receipt" means a document of title issued by a person engaged in the business of storing goods for hire; and

(43) "writing" includes printing, typewriting or any other intentional reduction to tangible form. "Written" has a corresponding meaning.

History: 1953 Comp., § 50A-1-201, enacted by Laws 1961, ch. 96, § 1-201; 1967, ch. 186, § 4; 1985, ch. 193, § 2; 1987, ch. 248, § 1; 1992, ch. 114, § 3; 1993, ch. 214, § 1; 2001, ch. 139, § 127; 2005, ch. 144, § 9.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Source. — Former Section 1-201 [55-1-201 NMSA 1978].

Changes from former law. — In order to make it clear that all definitions in the Uniform Commercial Code (not just those appearing in Article 1, as stated in former Section 1-201 [55-1-201 NMSA 1978], but also those appearing in other Articles) do not apply if the context otherwise requires, a new Subsection (a) to that effect has been added, and the definitions now appear in Subsection (b). The reference in Subsection (a) to the "context" is intended to refer to the context in which the defined term is used in the Uniform Commercial Code. In other words, the definition applies whenever the defined term is used unless the context in which the defined term is used in the statute indicates that the term was not used in its defined sense. Consider, for example, Sections 3-103(a)(9) [55-3-103(a)(9) NMSA 1978] (defining "promise," in relevant part, as "a written undertaking to pay money signed by the person undertaking to pay") and 3-303(a)(1) [55-3-303(a)(1) NMSA 1978] (indicating that an instrument is issued or transferred for value if "the instrument is issued or transferred for a promise of performance, to the extent that the promise has been performed"). It is clear from the statutory context of the use of the word "promise" in Section 3-303(a)(1) that the term was not used in the sense of its definition in Section 3-103(a)(9). Thus, the Section 3-103(a)(9) definition should not be used to give meaning to the word "promise" in Section 3-303(a).

Some definitions in former Section 1-201 [55-1-201 NMSA 1978] have been reformulated as substantive provisions and have been moved to other sections. See Sections 1-202 [55-1-202 NMSA 1978] (explicating concepts of notice and knowledge formerly addressed in Sections 1-201(25)-(27)[55-1-201(25)-(27) NMSA 1978]), 1-204 [55-1-204 NMSA 1978](determining when a person gives value for rights, replacing the definition of "value" in former Section 1-201(44) [55-1-201(44) NMSA 1978]), and 1-206 [55-1-206 NMSA 1978] (addressing the meaning of presumptions, replacing the definitions of "presumption" and "presumed" in former Section 1-201(31)[55-1-201(31) NMSA 1978]). Similarly, the portion of the definition of "security interest" in former Section 1-201(37) [55-1-201(37) NMSA 1978] which explained the difference between a security interest and a lease has been relocated to Section 1-203 [55-1-203 NMSA 1978].

Two definitions in former Section 1-201 [55-1-201 NMSA 1978] have been deleted. The definition of "honor" in former Section 1-201(21) [55-1-201(21) NMSA 1978] has been moved to Section 2-103(1)(b) [55-2-103(1)(b) NMSA 1978], inasmuch as the definition only applies to the use of the word in Article 2. The definition of "telegram" in former Section 1-201(41) [55-1-201(41) NMSA 1978] has been deleted because that word no longer appears in the definition of "conspicuous."

Other than minor stylistic changes and renumbering, the remaining definitions in this section are as in former Article 1 except as noted below.

1. "Action." Unchanged from former Section 1-201 [55-1-201 NMSA 1978], which was derived from similar definitions in Section 191, Uniform Negotiable Instruments Law; Section 76, Uniform Sales Act; Section 58, Uniform Warehouse Receipts Act; Section 53, Uniform Bills of Lading Act.

2. "Aggrieved party." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

3. "Agreement." Derived from former Section 1-201 [55-1-201 NMSA 1978]. As used in the Uniform Commercial Code the word is intended to include full recognition of usage of trade, course of dealing, course of performance and the surrounding circumstances as effective parts thereof, and of any agreement permitted under the provisions of the Uniform Commercial Code to displace a stated rule of law. Whether an agreement has legal consequences is determined by applicable provisions of the Uniform Commercial Code and, to the extent provided in Section 1-103 [55-1-103 NMSA 1978], by the law of contracts.

4. "Bank." Derived from Section 4A-104 [55-4A-104 NMSA 1978].

5. "Bearer." Unchanged from former Section 1-201 [55-1-201 NMSA 1978], which was derived from Section 191, Uniform Negotiable Instruments Law.

6. "Bill of Lading." Derived from former Section 1-201 [55-1-201 NMSA 1978]. The reference to, and definition of, an "airbill" has been deleted as no longer necessary.

7. "Branch." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

8. "Burden of establishing a fact." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

9. "Buyer in ordinary course of business." Except for minor stylistic changes, identical to former Section 1-201 [55-1-201 NMSA 1978] (as amended in conjunction with the 1999 revisions to Article 9). The major significance of the phrase lies in Section 2-403 [55-2-403 NMSA 1978] and in the Article on Secured Transactions (Article 9).

The first sentence of paragraph (9) makes clear that a buyer from a pawnbroker cannot be a buyer in ordinary course of business. The second sentence explains what it means to buy "in the ordinary course." The penultimate sentence prevents a buyer that does not have the right to possession as against the seller from being a buyer in ordinary course of business. Concerning when a buyer obtains possessory rights, see Sections 2-502 and 2-716 [55-2-502 and 55-2-716 NMSA 1978]. However, the penultimate sentence is not intended to affect a buyer's status as a buyer in ordinary course of business in cases (such as a "drop shipment") involving delivery by the seller to a person buying from the buyer or a donee from the buyer. The requirement relates to whether as against the seller the buyer or one taking through the buyer has possessory rights.

10. "Conspicuous." Derived from former Section 1-201(10) [55-1-201(10) NMSA 1978]. This definition states the general standard that to be conspicuous a term ought to be noticed by a reasonable person. Whether a term is conspicuous is an issue for the court. Subparagraphs (A) and (B) set out several methods for making a term conspicuous. Requiring that a term be conspicuous blends a notice function (the term ought to be noticed) and a planning function (giving guidance to the party relying on the term regarding how that result can be achieved). Although these paragraphs indicate some of the methods for making a term attention-calling, the test is whether attention can reasonably be expected to be called to it. The statutory language should not be construed to permit a result that is inconsistent with that test.

11. "Consumer." Derived from Section 9-102(a)(25) [55-9-102 (a)(25) NMSA 1978].

12. "Contract." Except for minor stylistic changes, identical to former Section 1-201 [55-1-201 NMSA 1978].

13. "Creditor." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

14. "Defendant." Except for minor stylistic changes, identical to former Section 1-201 [55-1-201 NMSA 1978], which was derived from Section 76, Uniform Sales Act.

15. "Delivery." Derived from former Section 1-201 [55-1-201 NMSA 1978]. The reference to certificated securities has been deleted in light of the more specific treatment of the matter in Section 8-301 [55-8-301 NMSA 1978].

16. "Document of title." Unchanged from former Section 1-201 [55-1-201 NMSA 1978], which was derived from Section 76, Uniform Sales Act. By making it explicit that the obligation or designation of a third party as "bailee" is essential to a document of title, this definition clearly rejects any such result as obtained in Hixson v. Ward, 254 Ill.App. 505 (1929), which treated a conditional sales contract as a document of title. Also the definition is left open so that new types of documents may be included. It is unforeseeable what documents may one day serve the essential purpose now filled by warehouse receipts and bills of lading. Truck transport has already opened up problems which do not fit the patterns of practice resting upon the assumption that a draft can move through banking channels faster than the goods themselves can reach their destination. There lie ahead air transport and such probabilities as teletype transmission of what may some day be regarded commercially as "Documents of Title." The definition is stated in terms of the function of the documents with the intention that any document which gains commercial recognition as accomplishing the desired result shall be included within its scope. Fungible goods are adequately identified within the language of the definition by identification of the mass of which they are a part.

Dock warrants were within the Sales Act definition of document of title apparently for the purpose of recognizing a valid tender by means of such paper. In current commercial practice a dock warrant or receipt is a kind of interim certificate issued by steamship companies upon delivery of the goods at the dock, entitling a designated person to have issued to him at the company's office a bill of lading. The receipt itself is invariably nonnegotiable in form although it may indicate that a negotiable bill is to be forthcoming. Such a document is not within the general compass of the definition, although trade usage may in some cases entitle such paper to be treated as a document of title. If the dock receipt actually represents a storage obligation undertaken by the shipping company, then it is a warehouse receipt within this section regardless of the name given to the instrument.

The goods must be "described," but the description may be by marks or labels and may be qualified in such a way as to disclaim personal knowledge of the issuer regarding contents or condition. However, baggage and parcel checks and similar "tokens" of storage which identify stored goods only as those received in exchange for the token are not covered by this Article.

The definition is broad enough to include an airway bill.

17. "Fault." Derived from former Section 1-201 [55-1-201 NMSA 1978]. "Default" has been added to the list of events constituting fault.

18. "Fungible goods." Derived from former Section 1-201 [55-1-201 NMSA 1978]. References to securities have been deleted because Article 8 no longer uses the term "fungible" to describe securities. Accordingly, this provision now defines the concept only in the context of goods.

19. "Genuine." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

20. "Good faith." Former Section 1-201(19) [55-1-201(19) NMSA 1978] defined "good faith" simply as honesty in fact; the definition contained no element of commercial reasonableness. Initially, that definition applied throughout the Code with only one exception. Former Section 2-103(1)(b) [55-2-103(1)(b) NMSA 1978] provided that "in that Article, 'good faith' in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade." This alternative definition was limited in applicability, though, because it applied only to transactions within the scope of Article 2 and it applied only to merchants.

Over time, however, amendments to the Uniform Commercial Code brought the Article 2 merchant concept of good faith (subjective honesty and objective commercial reasonableness) into other Articles. First, Article 2A explicitly incorporated the Article 2 standard. See Section 2A-103(7) [55-2A-103(7) NMSA 1978]. Then, other Articles broadened the applicability of that standard by adopting it for all parties rather than just for merchants. See, e.g., Sections 3-103(a)(4), 4A-105(a)(6), 7-102(a)(6), 8-102(a)(10), and 9-102(a)(43) [55-3-103(a)(4), 55-4A-105(a)(6), 55-7-102(a)(6), 55-8-102(a)(10), and 55-9-102(a)(43) NMSA 1978]. Finally, Articles 2 and 2A were amended so as to apply the standard to non-merchants as well as merchants. See Sections 2-103(1)(j), 2A-103(1)(m) [55-2-10355-2A-103 NMSA 1978]. All of these definitions are comprised of two elements honesty in fact and the observance of reasonable commercial standards of fair dealing. Only revised Article 5 defines "good faith" solely in terms of subjective honesty, and only Article 6 (in the few states that have not chosen to delete the Article) is without a definition of good faith. (It should be noted that, while revised Article 6 did not define good faith, Comment 2 to revised Section 6-102 [55-6-102 NMSA 1978] states that "this Article adopts the definition of 'good faith' in Article 1 in all cases, even when the buyer is a merchant.")

Thus, the definition of "good faith" in this section merely confirms what has been the case for a number of years as Articles of the UCC have been amended or revised the obligation of "good faith," applicable in each Article, is to be interpreted in the context of all Articles except for Article 5 as including both the subjective element of honesty in fact and the objective element of the observance of reasonable commercial standards of fair dealing. As a result, both the subjective and objective elements are part of the standard of "good faith," whether that obligation is specifically referenced in another Article of the Code (other than Article 5) or is provided by this Article.

Of course, as noted in the statutory text, the definition of "good faith" in this section does not apply when the narrower definition of "good faith" in revised Article 5 is applicable.

As noted above, the definition of "good faith" in this section requires not only honesty in fact but also "observance of reasonable commercial standards of fair dealing." Although "fair dealing" is a broad term that must be defined in context, it is clear that it is concerned with the fairness of conduct rather than the care with which an act is performed. This is an entirely different concept than whether a party exercised ordinary care in conducting a transaction. Both concepts are to be determined in the light of reasonable commercial standards, but those standards in each case are directed to different aspects of commercial conduct. See e.g., Sections 3-103(a)(9) and 4-104(c) [55-3-103(a)55-4-104(c) NMSA 1978] and Comment 4 to Section 3-103 [55-3-103 NMSA 1978].

21. "Holder." Derived from former Section 1-201 [55-1-201 NMSA 1978]. The definition has been reorganized for clarity.

22. "Insolvency proceedings." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

23. "Insolvent." Derived from former Section 1-201 [55-1-201 NMSA 1978]. The three tests of insolvency "generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute as to them," "unable to pay debts as they become due," and "insolvent within the meaning of the federal bankruptcy law" are expressly set up as alternative tests and must be approached from a commercial standpoint.

24. "Money." Substantively identical to former Section 1-201 [55-1-201 NMSA 1978]. The test is that of sanction of government, whether by authorization before issue or adoption afterward, which recognizes the circulating medium as a part of the official currency of that government. The narrow view that money is limited to legal tender is rejected.

25. "Organization." The former definition of this word has been replaced with the standard definition used in acts prepared by the National Conference of Commissioners on Uniform State Laws.

26. "Party." Substantively identical to former Section 1-201 [55-1-201 NMSA 1978]. Mention of a party includes, of course, a person acting through an agent. However, where an agent comes into opposition or contrast to the principal, particular account is taken of that situation.

27. "Person." The former definition of this word has been replaced with the standard definition used in acts prepared by the National Conference of Commissioners on Uniform State Laws.

28. "Present value." This definition was formerly contained within the definition of "security interest" in former Section 1-201(37) [55-1-201(37) NMSA 1978].

29. "Purchase." Derived from former Section 1-201 [55-1-201 NMSA 1978]. The form of definition has been changed from "includes" to "means."

30. "Purchaser." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

31. "Record." Derived from Section 9-102(a)(69) [55-9-102(a)(69) NMSA 1978].

32. "Remedy." Unchanged from former Section 1-201 [55-1-201 NMSA 1978]. The purpose is to make it clear that both remedy and right (as defined) include those remedial rights of "self help" which are among the most important bodies of rights under the Uniform Commercial Code, remedial rights being those to which an aggrieved party may resort on its own.

33. "Representative." Derived from former Section 1-201 [55-1-201 NMSA 1978]. Reorganized, and form changed from "includes" to "means."

34. "Right." Except for minor stylistic changes, identical to former Section 1-201 [55-1-201 NMSA 1978].

35. "Security Interest." The definition is the first paragraph of the definition of "security interest" in former Section 1-201 [55-1-201 NMSA 1978], with minor stylistic changes. The remaining portion of that definition has been moved to Section 1-203 [55-1-203 NMSA 1978]. Note that, because of the scope of Article 9, the term includes the interest of certain outright buyers of certain kinds of property.

36. "Send." Derived from former Section 1-201 [55-1-201 NMSA 1978]. Compare "notifies".

37. "Signed." Derived from former Section 1-201 [55-1-201 NMSA 1978]. Former Section 1-201 referred to "intention to authenticate"; because other articles now use the term "authenticate," the language has been changed to "intention to adopt or accept." The latter formulation is derived from the definition of "authenticate" in Section 9-102(a)(7) [55-9-102(a)(7) NMSA 1978]. This provision refers only to writings, because the term "signed," as used in some articles, refers only to writings. This provision also makes it clear that, as the term "signed" is used in the Uniform Commercial Code, a complete signature is not necessary. The symbol may be printed, stamped or written; it may be by initials or by thumbprint. It may be on any part of the document and in appropriate cases may be found in a billhead or letterhead. No catalog of possible situations can be complete and the court must use common sense and commercial experience in passing upon these matters. The question always is whether the symbol was executed or adopted by the party with present intention to adopt or accept the writing.

38. "State." This is the standard definition of the term used in acts prepared by the National Conference of Commissioners on Uniform State Laws.

39. "Surety." This definition makes it clear that "surety" includes all secondary obligors, not just those whose obligation refers to the person obligated as a surety. As to the nature of secondary obligations generally, see Restatement (Third), Suretyship and Guaranty Section 1 (1996).

40. "Term." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

41. "Unauthorized signature." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

42. "Warehouse receipt." Unchanged from former Section 1-201 [55-1-201 NMSA 1978], which was derived from Section 76(1), Uniform Sales Act; Section 1, Uniform Warehouse Receipts Act. Receipts issued by a field warehouse are included, provided the warehouseman and the depositor of the goods are different persons.

43. "Written" or "writing." Unchanged from former Section 1-201 [55-1-201 NMSA 1978].

Repeals and reenactments. — Laws 2005, ch. 144, § 9, effective January 1, 2006, repealed former 55-1-201 NMSA 1978, relating to general definitions as enacted by Laws 1961, ch. 96, § 1-201, as amended, and enacted a new 55-1-201 NMSA 1978, also relating to general definitions. The section has been treated as a continuation of rather than a new section of the NMSA 1978. For current provisions relating to "notice" and "knowledge", former Subsections 25 to 27 of 55-1-201 NMSA 1978, see 55-1-202 NMSA 1978.

Compiler's notes. — The "Official Comments" set out above was copyrighted in 1990 by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, and is reprinted with permission of the Permanent Editorial Board of the Uniform Commercial Code.

The 2001 amendment, effective July 1, 2001, rewrote Subsection (9); inserted "security interest" in Subsection (32); in the first paragraph of Subsection (37), substituted "any interest of a consignor and a buyer of accounts, chattel paper, a payment intangible or a promissory note in a transaction that is subject" for "any interest of a buyer of accounts or chattel paper is subject" in the first sentence, deleted the former fourth sentence which read "Unless a consignment is intended as security, reservation of title thereunder is not a 'security interest', but a consignment in any event is subject to the provisions on consignment sales (Section 55-2-326 NMSA 1978)"; and added the present fourth sentence.

The 1993 amendment, effective July 1, 1993, substituted "Sections 55-1-205, 55-2-208 and 55-2A-207 NMSA 1978" for "Sections 55-1-205, and 55-2-208 NMSA 1978" in Subsection (3); made a stylistic change in Subsection (25); and in Subsection (44), substituted "(Sections 55-3-303, 55-4-210 and 55-4-211 NMSA 1978)" for "(Sections 55-3-303, 55-4-208 and 55-4-209 NMSA 1978)" and made stylistic changes within the subsection.

The 1992 amendment, effective July 1, 1992, inserted "means goods or securities" in the first sentence of Subsection (17); rewrote Subsection (20); substituted all of the present language of Subsection (24) following "government" for "as a part of its currency"; rewrote Subsection (37); and deleted "or indorsement" following "signature" in Subsection (43).

The 1987 amendment, effective June 19, 1987, substituted "the Uniform Commercial Code" for "this act" and NMSA citations for UCC citations at several places throughout the section, inserted "certificated" in Subsections (5), (14) and (20), and made minor stylistic changes throughout the section.

The 1985 amendment added the second sentence in Subsection (9), deleted "means goods or securities" following "with respect to goods or securities" near the beginning of Subsection (17), substituted "buyer of accounts or chattel paper which is subject to Article 9" for "buyer of accounts, chattel paper or contract rights which is subject to Article 9" in the third sentence of Subsection (37), and made minor grammatical changes.

I. GENERAL CONSIDERATION.

Remedies of guarantors. — A contributing guarantor has the right to seek reimbursement, restitution, or subrogation against a defaulting principal debtor to the extent of his or her contribution. Randles v. Hanson, 2011-NMCA-059, 150 N.M. 362, 258 P.3d 1154.

Rights of co-guarantors. — A co-guarantor who has fulfilled a duty of contribution to a performing co-guarantor is entitled to recourse against a principle debtor as though the contributing co-guarantor had performed the guaranty to the same extent as his or her contribution. A performing co-guarantor's claim against a principal debtor is reduced to the extent that he or she receives contribution from another co-guarantor. Randles v. Hanson, 2011-NMCA-059, 150 N.M. 362, 258 P.3d 1154.

Rights of a contributing guarantor. — Where five individuals, including plaintiff, personally guaranteed a $500,000 bank loan to a third party; the five guarantors entered into an agreement which provided that each guarantor was jointly and severally liable for all unpaid amounts on the loan and that each guarantor would be responsible for paying an equal share of any unpaid amounts; when the third party defaulted on the loan, plaintiff refused to pay a pro-rata share of the amount due; three of the guarantors paid the $500,000 due on the loan and recovered a judgment against plaintiff for plaintiff's $100,000 pro-rata share, which plaintiff paid; and the third party subsequently reimbursed the three guarantors the $500,000 they had paid on the loan, plaintiff was entitled to receive $100,000 of the amount received by the three guarantors. Randles v. Hanson, 2011-NMCA-059, 150 N.M. 362, 258 P.3d 1154.

II. CONTRACT.

Intent where written contract uncertain. — Where a written contract is uncertain or ambiguous, the intent of the parties may be ascertained by their language and conduct, the objects sought to be accomplished, and surrounding circumstances at the time of execution of the contract. Leonard v. Barnes, 1965-NMSC-080, 75 N.M. 331, 404 P.2d 292.

Purchase order qualified as contract for sale of goods. State ex rel. Concrete Sales & Equip. Rental Co. v. Kent Nowlin Constr., Inc., 1987-NMSC-114, 106 N.M. 539, 746 P.2d 645.

III. SECURITY INTEREST.

When lease deemed security interest. — Where agreement provides that upon full payment of rentals lessee will become owner of property with no other or further consideration, this provision introduces an element under which an equity interest in the property is being created in lessee through payment of rentals. In accordance with the undisputed facts and language of the agreements the parties are deemed as a matter of law to have intended lease as one creating a security interest within the meaning of the Code. Rust Tractor Co. v. Bureau of Revenue, 1970-NMCA-107, 82 N.M. 82, 475 P.2d 779, cert. denied, 82 N.M. 81, 475 P.2d 778.

Intention of parties controls instrument. — Under general law, the character of the instrument is not to be determined by its form, but from the intention of the parties as shown by the contents of the instrument. Transamerica Leasing Corp. v. Bureau of Revenue, 1969-NMCA-011, 80 N.M. 48, 450 P.2d 934.

Payment of "money" to satisfy real estate note. — A borrower was not authorized by the promissory note and deed of trust in a real estate loan transaction to tender the real estate securing the note instead of currency to extinguish the obligation where the lender only agreed to look solely to the property for satisfaction of the principal debt in the event of default rather than take a personal judgment against the borrower. To require the maker of a promissory note, in the absence of a specific agreement otherwise, to pay the note in "money" is consistent with the demands of modern commercial practice. Brown v. Financial Sav., 1992-NMSC-025, 113 N.M. 500, 828 P.2d 412.

Mortgage serving as security interest. — Although a mortgage, without more, is not sufficient to automatically attach to the proceeds of a separate real estate contract, when a contract vendor offered his interest in the property as security for a loan the mortgage served as a security interest and was perfected upon filing with the county clerk's office where the property was located. Finch v. Beneficial N.M., Inc., 1995-NMSC-068, 120 N.M. 658, 905 P.2d 198.

IV. SIGNED.

Effect of lack of signature on purchase order. — Where purchase order was completely filled in with all relevant information regarding the backhoe to be purchased, including the full purchase price, approximate delivery date and purchaser's signature, the lack of the salesman's signature on the appropriate line did not negate present intention to authenticate the purchase order. Watson v. Tom Growney Equip., Inc., 1986-NMSC-046, 104 N.M. 371, 721 P.2d 1302.

V. BUYER IN ORDINARY COURSE OF BUSINESS.

The significance of being a buyer in the ordinary course of business is the acquisition of goods free of any outstanding claims from those who may be the true owners. Therefore, a buyer in the ordinary course of business is a privileged status that is conferred upon a purchaser, even against the true owners, if he meets the requirements of Paragraphs (9) and (19) (now 20) of this section. Hunick v. Orona, 1983-NMSC-009, 99 N.M. 306, 657 P.2d 633.

VI. CONSPICUOUS.

When language on reverse of form is conspicuous. — Language which refers the reader to conditions or provisions on the reverse side of a form suffices to make the language referred to conspicuous. Deaton, Inc. v. Aeroglide Corp., 1982-NMSC-147, 99 N.M. 253, 657 P.2d 109.

Limited warranty conspicuous. — The defendant's disclaimer of the implied warranties of merchantability and fitness for a particular purpose was conspicuous as a matter of law, since the record indicated that the warranty was printed on both sides of a full-size page on a different grain of paper, was highlighted and contrasted by different colors, and was set out in capital letters. LWT, Inc. v. Childers, 19 F.3d 539 (10th Cir. 1994).

VII. GOOD FAITH.

Elements of "good faith". — Nothing in the definition of "good faith" suggests that in addition to being honest, the creditor must exercise due care or reasonable commercial standards or lack of negligence to be in good faith. McKay v. Farmers & Stockmens Bank, 1978-NMCA-070, 92 N.M. 181, 585 P.2d 325, cert. denied, 92 N.M. 79, 582 P.2d 1292 (specially concurring opinion).

"Good faith" usually question of fact. — "Good faith" is not generally a question of law, but is usually a question of fact. McKay v. Farmers & Stockmens Bank, 1978-NMCA-070, 92 N.M. 181, 585 P.2d 325, cert. denied, 92 N.M. 79, 582 P.2d 1292; Citizens Bank v. Runyan, 1990-NMSC-036, 109 N.M. 672, 789 P.2d 620.

VIII. HOLDER.

Payee in possession of instrument. — A negotiable instrument payee is always a holder if the payee has the instrument in his possession, since the payee is the person to whom the instrument was issued. Edwards v. Mesch, 1988-NMSC-085, 107 N.M. 704, 763 P.2d 1169.

Where issued cashier's check, bank not holder in due course upon subsequent presentment. — In issuing a cashier's check, a bank acts as both drawer and drawee, since a cashier's check constitutes a draft drawn by the bank upon itself, and upon the subsequent presentment of the check, the bank is not a holder in due course. Casarez v. Garcia, 1983-NMCA-013, 99 N.M. 508, 660 P.2d 598, cert. denied, 99 N.M. 578, 661 P.2d 478.

The requisites of an effective signature are liberal in scope. 1962 Op. Att'y Gen. No. 62-03.

Making of instruments generally. — Instruments offered for filing are not required to be either made or written in ink or with an indelible pencil, but such may be either made or executed by lead pencil, or by any other methods of writing or execution. 1962 Op. Att'y Gen. No. 62-132.

Law reviews. — For article, "Attachment in New Mexico - Part II," see 2 Nat. Resources J. 75 (1962).

For article, "New Mexico's Uniform Commercial Code: Who is the Beneficiary of Stop Payment Provisions of Article 4?" see 4 Nat. Resources J. 69 (1964).

For article, "Special Property Under the Uniform Commercial Code: A New Concept in Sales," see 4 Nat. Resources J. 98 (1964).

Graham v. Stoneham, 73 N.M. 382, 388 P.2d 389 (1963), commented on in 4 Nat. Resources J. 175 (1964).

For note, "New Mexico's Uniform Commercial Code: Presentment Warranties and the Myth of the 'Shelter Provision' " see 4 Nat. Resources J. 398 (1964).

For comment, "Assignments - Maker's Defenses Cut Off - Uniform Commercial Code § 9-206," see 5 Nat. Resources J. 408 (1965).

For article, "The Warehouseman vs. the Secured Party: Who Prevails When the Warehouseman's Lien Covers Goods Subject to a Security Interest?" see 8 Nat. Resources J. 331 (1968).

For comment on Loucks v. Albuquerque Nat'l Bank, 76 N.M. 735, 418 P.2d 191 (1966), see 8 Nat. Resources J. 169 (1968).

For comment on Strevell-Paterson Fin. Co. v. May, 77 N.M. 331, 422 P.2d 366 (1967), see 8 Nat. Resources J. 713 (1968).

For comment, "New Mexico's Uniform Commercial Code in Oil and Gas Transactions," see 10 Nat. Resources J. 361 (1970).

For article, "Buyers and Sellers of Goods in Bankruptcy," see 1 N.M. L. Rev. 435 (1971).

For article, "Essential Attributes of Commercial Paper - Part I," see 1 N.M. L. Rev. 479 (1971).

For article, "The Community Property Act of 1973: A Commentary and Quasi-Legislative History," see 5 N.M. L. Rev. 1 (1974).

For survey, "The Uniform Owner-Resident Relations Act," see 6 N.M. L. Rev. 293 (1976).

For annual survey of commercial law in New Mexico, see 18 N.M.L. Rev. 313 (1988).

For note, "Commercial Law - And Then Personal Property Became Real Property: In re Anthony," see 23 N.M.L. Rev. 263 (1993).

For article, "Secured Transactions History: The Fraudulent Myth," see 29 N.M.L. Rev. 363 (1999).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 11 Am. Jur. 2d Bills and Notes §§ 48, 49; 15A Am. Jur. 2d Commercial Code §§ 4, 27, 104, 115; 67 Am. Jur. 2d Sales §§ 10 to 69; 68A Am. Jur. 2d Secured Transactions §§ 31, 163 et seq.

Who is "buyer in ordinary course of business" under Uniform Commercial Code, 87 A.L.R.3d 11.

What constitutes "money" within meaning of Uniform Commercial Code, 40 A.L.R.4th 346.

Who is "creditor" within meaning of § 103(f) of Truth in Lending Act (15 U.S.C.A. § 1602(f)), 157 A.L.R. Fed. 419.

82 C.J.S. Statutes § 315.